Senate Republican Leader Patricia Bates and Asm. Bill Brough Respond to State Auditor's Report on South OC Wastewater Authority

Thursday, March 22, 2018

SACRAMENTO – Senate Republican Leader Patricia Bates (R-Laguna Niguel) and Assemblyman Bill Brough (R-Dana Point) issued the following statement after the nonpartisan State Auditor’s office released its audit today of the South Orange County Wastewater Authority (SOCWA).

“This state audit validates how SOCWA has been mismanaged over several years. Missing financial statements, failure to report assets, and unfulfilled public records requests are worrisome.

“It’s important for SOCWA to be transparent about its use of ratepayers’ dollars. We are encouraged that SOCWA agrees with the audit’s findings and recommendations. We urge SOCWA to work with their stakeholders and the county auditor to remedy these issues and create better oversight in a timely manner.”

“We thank the State Auditor and her team for their hard work on completing the SOCWA audit. Moving forward, we will continue to fastidiously monitor SOCWA’s progress and remain a committed partner with the state auditor.”

The audit recommends SOCWA “should continue to improve its accounting of member agencies’ funds and determine whether members are responsible for its unfunded liabilities.” Senator Bates and Assemblyman Brough requested the audit last year after local officials raised concerns about the integrity of SOCWA’s financial management of public funds.

AUDIT HIGHLIGHTS

  • SOCWA’s financial statements were missing certain land, building, and infrastructure assets.
  • SOCWA did not meet its JPA agreement requirement to provide its audited financial statements with its members, the State Controller’s Office, and the Orange County Auditor‐Controller within six months of its fiscal year‐end for four of the last five fiscal years.
  • SOCWA’s management did not promptly address deficiencies in its internal controls that its external auditors indented during their audits of SOCWA’s financial statements for fiscal years 2012–13 through 2015–16.
  • Although its process for selecting an external auditor meets most best-practices, SOCWA’s policy does not require multiyear contracts with its external auditor or rotation of its external auditor.

SOCWA is a Joint Powers Authority (JPA) consisting of 10 Orange County water agencies that represent over 500,000 businesses and residents. SOCWA is funded by each participating water agency who allocates taxpayer dollars to provide wastewater services to South Orange County. JPA’s are funded by taxpayer dollars and must be legally audited and accounted for on a regular basis.

Click on the links below to view resources from the State Auditor related to the SOCWA audit:

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Senate Republican Leader Patricia Bates (R-Laguna Niguel) represents the 36th Senate District in the California Legislature, which covers South Orange County, North San Diego County and Marine Corps Base Camp Pendleton. Follow her on Twitter and Facebook.

Assemblyman William P. Brough represents California’s 73rd Assembly District in the Legislature, which includes the communities of Aliso Viejo, Coto de Caza, Dana Point, Ladera Ranch, Laguna Hills, Laguna Niguel, Las Flores, Mission Viejo, Rancho Santa Margarita, San Clemente and San Juan Capistrano. Follow him on Facebook.